An upturn in sentiment globally has prompted investors to snap up Malaysian assets in search of bargains. This was reflected not only in the FBM KLCI’s rise recently, but also in the currency and fixed-income markets.

According to Maybank Investment Bank Research (Maybank IB) in a note yesterday, portfolio capital inflows were the key driver as the country’s external reserves grew to US$97.2 billion as of April 15 from US$97 billion on March 31.

According to the research house, foreigners were net buyers of Malaysian bonds in March with some 11.5 billion ringgit (US$2.93 billion) worth of purchases, the highest monthly inflow since May 2014.

“Also worth noting was the government’s US$1.5 billion sukuk (Islamic bond) issuance this month in two tranches, which was oversubscribed by 4.2 times.

“This alone will contribute to a net US$300 million addition to the external reserves,” it said.

On the other hand, signs are emerging that investors’ appetite for Malaysian equities is slowing down due to a downturn in global sentiment.

China’s Shanghai Composite Index fell by almost 4 per cent last week, as improved economic gauges for the country may lead to little to no easing in its monetary policy, which would have been supportive of corporate spending as well as stock prices.

Elsewhere, US markets are anticipating an influx of earnings reports by top blue chips that make up the Standard & Poor’s 500 Index this week.

The financial performance of top US manufacturers during the first quarter of this year would be a major indicator of whether global consumer demand is slowing down.

In its weekly fund flow report yesterday, MIDF Research noted that purchases by foreign investors had dipped slightly last week, although it was enough to stretch the net buying streak to 10 consecutive weeks.

Last week, the net purchases by foreign investors amounted to 107 million ringgit. However, the total tally of purchases over the 10 weeks is 7.32 billion ringgit, it said.

“The amount of purchases had receded for five consecutive weeks from the peak recorded in the week ended March 18, where 1.48 billion ringgit was mopped up.

“Last week’s foreign purchases boosted the cumulative year-to-date net inflow to 6.4 billion ringgit, still relatively low after 19.5 billion ringgit in net outflows for 2015,” MIDF said.

Despite its year-to-date gain of 3.7 per cent, the FBM KLCI has failed to breach 1,728 points over the past one month and is showing signs of consolidation.

It closed at 1,714.51 points yesterday, or a decline of 3.45 points from last Friday.

In a separate report, Maybank IB analyst Lee Cheng Hooi warned that the market’s uptrend may be stalling.

“The index fell 10.03 points last week, as blue chip profit-taking suppressed the local index, with weekly volume rising from 1.49 billion shares to 1.99 billion.

“A sideward and range-bound bias might persist this week, with key support areas at 1,698 and 1,715 points,” he said.

(US$1 = 3.93 ringgit)